McDonald's (MCD) Rewards Investors With a 10% Dividend Hike

In a shareholder-friendly move, McDonald's Corporation MCD announced a hike in its dividend payout. The company raised its quarterly dividend by 10% to $1.52 per share. The new dividend will be paid on Dec 15 to shareholders on record as of Dec 1.

Following the hike, the company’s new annualized dividend amounted to $6.08 per share, giving a yield of 2.4%. In 2021, the company raised its dividend by 7%. MCD’s payout ratio is 56, with a five-year dividend growth rate of 7.3%.

Notably, McDonald’s has a history of increasing dividends every year since the inception of its dividend payout policy in 1976. The company has increased dividends for 46 consecutive years.

Dividend hikes not only enhance shareholder returns but also raise the market value of the stock. Therefore, companies often tend to attract new investors and retain old ones through this strategy.

We appreciate McDonald's consistent efforts to enhance shareholder returns, despite the high inflation affecting most industries. These initiatives reflect the company’s business strength and the sustainability of its cash flows.

In the past year, this Zacks Rank #3 (Hold) stock has gained 1.9% against the industry’s 14.4% decline.

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Expansion Strategy Driving Growth

The company is very confident in its growth strategy and continues to focus on driving long-term profitable growth for all its shareholders. McDonald’s is the world’s largest chain of fast-food restaurants with its presence in more than 100 countries. Its offerings have reached a billion-dollar brand status through sustained product innovations and geographic expansions.

McDonald’s believes that there is a huge opportunity to grow all its brands globally by expanding its presence in existing markets and entering new ones. Its expansion efforts continue to drive performance. Despite the coronavirus outbreak, the company continues to expand its global footprint.

The company is planning to open more than 1,800 restaurants globally in 2022, which includes 500 openings in the United States and IOM segments and 1,300 (including nearly 800 in China) inaugurations in the IDL market. The company expects restaurant growth to be nearly 3.5% in 2022.

Key Picks

Some better-ranked stocks in the Zacks Retail-Wholesale sector are Wingstop Inc. WING, Yum China Holdings, Inc. YUMC and Sprouts Farmers Market, Inc. SFM.

Wingstop carries a Zacks Rank #2 (Buy). It has a long-term earnings growth of 11%. Shares of the company have declined 29.2% in the past year. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

The Zacks Consensus Estimate for WING’s 2023 sales and EPS suggests growth of 17.5% and 18.4%, respectively, from the year-ago period’s levels.

Yum China carries a Zacks Rank #2. It has a long-term earnings growth of 10%. Shares of the company have declined 24.8% in the past year.

The Zacks Consensus Estimate for YUMC's 2023 sales and EPS suggests growth of 19.9% and 85.5%, respectively, from the year-ago period’s levels.

Sprouts Farmers Market carries a Zacks Rank #2. The company has a trailing four-quarter earnings surprise of 15.6%, on average. Shares of the company have increased 22.4% in the past year.

The Zacks Consensus Estimate for SFM’s 2023 sales and EPS suggests growth of 5.9% and 7.9%, respectively, from the year-ago period’s levels.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.